Correlation Between Chunghwa Telecom and Chung Fu
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Chung Fu at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Chunghwa Telecom and Chung Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chunghwa Telecom Co and Chung Fu Tex International, you can compare the effects of market volatilities on Chunghwa Telecom and Chung Fu and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Chunghwa Telecom with a short position of Chung Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Chung Fu.
Diversification Opportunities for Chunghwa Telecom and Chung Fu
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chunghwa and Chung is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Chung Fu Tex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Fu Tex and Chunghwa Telecom is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Chunghwa Telecom Co are associated (or correlated) with Chung Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Fu Tex has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Chung Fu go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Chung Fu
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.21 times more return on investment than Chung Fu. However, Chunghwa Telecom Co is 4.73 times less risky than Chung Fu. It trades about 0.08 of its potential returns per unit of risk. Chung Fu Tex International is currently generating about -0.17 per unit of risk. If you would invest 12,250 in Chunghwa Telecom Co on August 30, 2024 and sell it today you would earn a total of 100.00 from holding Chunghwa Telecom Co or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. Chung Fu Tex International
Performance |
| Timeline |
| Chunghwa Telecom |
| Chung Fu Tex |
Chunghwa Telecom and Chung Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Chung Fu
The main advantage of trading using opposite Chunghwa Telecom and Chung Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Chung Fu can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Chung Fu will offset losses from the drop in Chung Fu's long position.| Chunghwa Telecom vs. Taiwan Mobile Co | Chunghwa Telecom vs. China Steel Corp | Chunghwa Telecom vs. Formosa Plastics Corp | Chunghwa Telecom vs. Cathay Financial Holding |
| Chung Fu vs. Maxigen Biotech | Chung Fu vs. United Radiant Technology | Chung Fu vs. Microelectronics Technology | Chung Fu vs. Sun Max Tech |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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